5 Answers
5

If you want your photoshop to match the pixels on the Kindle, then your PSD file should be 1024x600 pixels. DPI is a measurement of the pixel density on the device itself and has no real bearing on your PSD file.

I'd say that when designing for a touchscreen device, PPI is useful as it means you can use rulers (or as e100 suggests, printouts) to simulate physical size (163mm x 95mm) for testing that absolute element sizes make sense - in particular, that interactive elements are proddable with a finger.
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user568458Apr 5 '12 at 9:16

The catch is that I don't believe PSD actually used the term PPI but still used DPI. So, it can be a little confusing.
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DA01Feb 21 '12 at 1:28

Where exactly does Photoshop get it wrong? Or are you saying it did in the past?
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e100Feb 21 '12 at 8:36

maybe it's changed, but I'm not aware of a PPI setting anywhere in Photoshop. Is it a new feature? In the past, you had to set the DPI--even if you were only using it to scale the image on-screen. In the end, you really don't set a PPI for an image. PPI is really a measurement of your screen, itself--not the image on it.
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DA01Feb 21 '12 at 15:06

It's possible it was once different, but check your File>New dialog and you'll see "pixels/inch". The case I outlined is unusual, but it's a valid counter-example to the idea that setting PPI is never useful.
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e100Feb 21 '12 at 15:29

Ah, yes, they have changed it...AND FOR THE WORSE! That setting should actually be DPI as it's only really relative for print. It could be relative for the screen, if one happens to know their particular screen's PPI, but few of us do. Since you can't change the PPI of your screen via the image, it's still a bit of a red herring setting.
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DA01Feb 21 '12 at 17:51